Earnings results often give us a good indication of what direction the company will take in the months ahead. With Q3 now behind us, let’s have a look at Paychex (NASDAQ:PAYX) and its peers.
HR software benefits from dual trends around costs savings and ease of use. First is the SaaS-ification of businesses, large and small, who much prefer the flexibility of cloud-based, web-browser delivered software paid for on a subscription basis than the hassle and expense of purchasing and managing on-premise enterprise software. Second is the consumerization of business software, whereby multiple standalone processes like payroll processing and compliance are aggregated into a single, easy to use platforms.
The 6 HR software stocks we track reported a decent Q3; on average, revenues beat analyst consensus estimates by 3.27%, while on average next quarter revenue guidance was 1.66% above consensus. Technology stocks have been hit hard on fears of higher interest rates as investors search for near-term cash flows, but HR software stocks held their ground better than others, with the share prices up 6.33% since the previous earnings results, on average.
One of the oldest payroll service providers, Paychex provides payroll and human resource (HR) solutions.
Paychex reported revenues of $1.19 billion, up 7.37% year on year, beating analyst expectations by 1.21%. It was a weaker quarter for the company, with slow revenue growth and a decline in gross margin.
John Gibson, President and Chief Executive Officer, commented, “We posted solid financial results for the second quarter, with growth of 7% in total revenue and 9% in diluted earnings per share, driven by our strong execution and comprehensive suite of solutions.”
Paychex delivered the weakest performance against analyst estimates and slowest revenue growth of the whole group. The stock is up 3.49% since the results and currently trades at $118.30.
Read our full report on Paychex here, it's free.
Best Q3: Paycor (NASDAQ:PYCR)
Found in 1990 in Cincinnati, Ohio Paycor (NASDAQ: PYCR), provides software for small businesses to manage their payroll and HR needs in one place.
Paycor reported revenues of $118.3 million, up 27.5% year on year, beating analyst expectations by 4.42%. Despite the stock dropping on the results, it was a very strong quarter for the company, with a full year guidance beating analysts' expectations.
Paycor pulled off the highest full year guidance raise among its peers. The stock is down 14.2% since the results and currently trades at $23.66.
Is now the time to buy Paycor? Access our full analysis of the earnings results here, it's free.
Founded in 1992 as an outsourced payroll processor and transformed after the 2012 acquisition of Dayforce, Ceridian (NYSE:CDAY) is a provider of cloud based payroll and HR software targeted at mid-sized businesses.
Ceridian reported revenues of $315.6 million, up 22.7% year on year, beating analyst expectations by 3.28%. It was a weaker quarter for the company, with a decline in gross margin and underwhelming revenue guidance for the next quarter.
Ceridian had the weakest full year guidance update in the group. The company added 120 customers to a total of 5,848. The stock is up 12.7% since the results and currently trades at $69.75.
Read our full analysis of Ceridian's results here.
Asure Software (NASDAQ:ASUR)
Created from the merger of two small workforce management companies in 2007, Asure (NASDAQ:ASUR) provides cloud based payroll and HR software for small and medium-sized businesses (SMBs).
Asure Software reported revenues of $21.9 million, up 21.8% year on year, beating analyst expectations by 3.25%. It was a solid quarter for the company, with a significant improvement in gross margin and revenue guidance for the next quarter above analysts' estimates.
The stock is up 49.6% since the results and currently trades at $9.80.
Read our full, actionable report on Asure Software here, it's free.
Paycom Software (NYSE:PAYC)
Founded in 1998 as one of the first online payroll companies. Today, Paycom (NYSE:PAYC) provides software for small and medium-sized businesses (SMBs) to manage their payroll and HR needs in one place.
Paycom Software reported revenues of $334.1 million, up 30.4% year on year, beating analyst expectations by 1.79%. It was a mixed quarter for the company, with very optimistic guidance for the next quarter but a decline in gross margin.
The stock is down 8.72% since the results and currently trades at $313.46.
Read our full, actionable report on Paycom Software here, it's free.
The author has no position in any of the stocks mentioned